Monday, July 29, 2013

What phenomena tends to drive down price while increasing quality?

Competition. The more competition, the greater the pressure for cheaper and better quality products. Consider the opposite of a competitive environment: a monopoly. People usually hate and fear monopolies (which, by the way, generally exist only in the form of a government entity or a government-backed firm such as a utility) because they provide terrible products at high prices...think US Postal Service.

In America, Obamacare is moving us closer and closer to government-provided healthcare, and to a future of horrible care at high costs. But there are still some places where there is competition for medical services. And guess what? Prices are lower and the treatment is at least as good (often better) as it is in the US. Hit and Run blog reports on the efforts of Dr. Devi Shetty, an entrepreneurial heart surgeon in India who charges less than $1600 (vs. $100,000 typical in America) for cardiac bypass surgery and has a 30% lower mortality rate than the average in the US. Most of his clients from the west are medical tourists, another phenomena you can learn more about at the Hit and Run post courtesy of a short video on medical tourism included there.